COURT FILE NO.: FS-20-97313
DATE: 20210122
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Charlene Ann Fry
Jessica K. Foote, for the Applicant
Applicant
- and -
Robert John Fry
A. Woodley, for the Respondent
Respondent
HEARD: November 27, 2020
REASONS FOR DECISION
Chown J.
Introduction
[1] Ms. Fry seeks interim spousal support, retroactive to the date of separation.
[2] The parties were married on May 27, 1978. They were separated after 41 years on August 1, 2019. They have two adult, non-dependant children. They continue to reside, separated, in the matrimonial home. They have not agreed on a valuation of the home.
[3] Ms. Fry is 65. She is employed as a school bus driver. She earned $35,076 in 2019, not including a dividend from Mr. Fry’s company.
[4] Mr. Fry is 69. He is a long-haul truck driver.
The Law
[5] Mr. Fry’s factum referred me to numerous authorities. I found Driscoll v. Driscoll, 2009 CanLII 66373 (ONSC) to be instructive. At para. 14, Justice Lemon refers to Robles v. Kuhn, 2009 BCSC 1163, which sets out the following “helpful list of principles governing interim support motions”:
On applications for interim support the applicant's needs and the respondent's ability to pay assume greater significance;
An interim support order should be sufficient to allow the applicant to continue living at the same standard of living enjoyed prior to separation if the payor's ability to pay warrants it;
On interim support applications the court does not embark on an in-depth analysis of the parties' circumstances which is better left to trial. The court achieves rough justice at best;
The courts should not unduly emphasize any one of the statutory considerations above others;
On interim applications the need to achieve economic self-sufficiency is often of less significance;
Interim support should be ordered within the range suggested by the Spousal Support Advisory Guidelines unless exceptional circumstances indicate otherwise;
Interim support should only be ordered where it can be said a prima facie case for entitlement has been made out;
Where there is a need to resolve contested issues of fact, especially those connected with a threshold issue, such as entitlement, it becomes less advisable to order interim support.
Entitlement
[6] Mr. Fry’s affidavit says that after the children were old enough to be on their own after school, he encouraged Ms. Fry to go back to school to retrain, to consider driving for another company, and to work more hours. She never did. However, it is not disputed that Ms. Fry assumed the role of full time caregiver for the children as well as managing the household. Mr. Fry enjoyed the economic advantage of an uninterrupted career and the support of Ms. Fry at home.
[7] With respect to Mr. Fry’s trucking business, Mr. Fry in his affidavit says that Ms. Fry “not only had full access to the business books, but she was the one that sent all of the books to the Accountant.” He also described that at one point “we” couldn’t keep up with the truck payments. It is also apparent that Ms. Fry could access the business bank account and that she was issued a dividend payment, at least for the fiscal year ending March 31, 2019. The reason for that is disputed in the parties’ affidavits. However, from this and the other available evidence I infer that Mr. Fry enjoyed Ms. Fry’s support with his business.
[8] I conclude that Ms. Fry has made out a prima facie case for entitlement to support on compensatory grounds.
Mr. Fry’s Income
[9] Mr. Fry operates his business, Bob Fry Trucking, through a corporation, 771344 Ontario Inc. The business operating statement reveals trucking revenues of $188,350 for the year ending March 31, 2019.
[10] However, Bob Fry Trucking shows net income of only $10,862 for the year ending March 31, 2019.
[11] Mr. Fry also has income from Old Age Security, CPP benefits, RRSP income, and taxable dividends.
[12] Mr. Fry asserts declining income, and given his age, the pandemic, and his health, which I will review below, this is not surprising.
[13] Ms. Fry argues that for purposes of calculating spousal support, the net business income of $10,862 grossly understates Mr. Fry’s true income. She asserts that income of $100,000 per year should be attributed to him. She provides no justification for this. Neither party has retained an accountant to provide a report.
Revenue
[14] Mr. Fry’s financial statements and tax records indicate that his company’s revenues have been relatively consistent. The amounts for the fiscal years ending March 31 were: 2016, $188,294; 2017, $176,468; 2018, $176,896; 2019, $188,350.
[15] Mr. Fry’s November 18, 2020 affidavit describes declining income, but with no specifics. For instance, he says that the business income “had reduced to the degree that we couldn't keep up with the truck expenses and were often in arrears with Orangeville Truck repair Centre often as much as $5,000-$7,000, with different amounts owing at different times.” He says “in the 2019 year due to lack of work, and medical, income was also reduced. In the 2020-year income reductions have been due to Covid 19, lack of work, and an injury that I sustained as well as my medical and hospital appointments due to my cancer.”
[16] I did my own review of the voluminous exhibits to Mr. Fry’s affidavit and found at exhibit E a vendor detail report from Mr. Fry’s “employer,” Diverse Transportation. By my calculation from this document, Mr. Fry’s company was paid roughly $127,800 over the one-year period from November 2019 to October 2020. No evidence has been provided to indicate that this is Bob Fry Trucking’s sole source of revenue, although I suspect that is the case based on his November 6, 2020 affidavit, which states that he left a former employer and “acquired my current employment through word of mouth, as I was a previous employee of Diverse.”
[17] The factum prepared on behalf of Mr. Fry states he is battling cancer. As mentioned above, Mr. Fry’s November 18, 2020 affidavit states that in 2020 he experienced income reduction due to, among other things, “medical and hospital appointments due to my cancer.” His affidavit does not describe disability, only reduced work hours for medical and hospital appointments due to his cancer.
[18] Mr. Fry’s November 6, 2020 affidavit also contains no explanation from Mr. Fry of his conditions, disabilities or concerns. The affidavit does refer to certain reports in the medical records. I was able to find the reports among the 115 unnumbered pages, in no discernable order.
[19] The first report is a to-whom-it-may-concern letter from an oncologist dated August 21, 2019 which states:
As a consequence of his diagnostic circumstance and relevant therapy, it has had an adverse impact on his endurance and capacity to provide the necessary requirements in the workforce as a long distance truck driver. Although Robert is committed to continue working for his current employer, on the other hand he recognizes that he requires a diminished number of days of employment and, as such, this letter verifies the fact that he has in fact been diagnosed with a medical circumstance, requires relevant therapy, yet furthermore the adverse impact of his therapy and diagnosis are such that, as per his discretion, with my support, the number of hours should be reduced accordingly; however, yet to be defined.
[20] A consultation note dated September 18, 2019 from the same oncologist to the family doctor states:
He has had remarkably good health overall, and although there is witnessed weight loss, it was more so diabetically related. He is pain-free and functionally independent, although acknowledges that his endurance is slightly reduced, which has had an impact on his work-related activities of long distance truck driver and, as such, relevant documentation has been provided to his employer.
[21] The family doctor wrote a note on the same date to whom it may concern that says that Mr. Fry has “multiple significant ongoing medical problems,” that he is “under considerable stress,” and that he should “reduce his work hours by about half indefinitely.”
[22] As indicated, Mr. Fry’s affidavit does not state whether he has in fact reduced his hours of work since these reports were prepared, or otherwise describe his disability. Further, his affidavit does not describe his plans for the future as far as work is concerned, or his cancer prognosis.
[23] In result, Bob Fry Trucking may have had a decline in revenue since March of 2019, but this is speculative because of the lack of detail in the affidavit material. I note that Mr. Fry could readily have provided full details of his income and expenses since March 2019, supported with documentation. I also note that a self employed person has the onus to demonstrate that the deductions claimed from gross income should reasonably be taken into account in the determination of net income for support purposes: D.W. v. C.O., 2006 CanLII 13554 (Ont. S.C.), at para. 13; MacKenzie v. Flynn, [2010] O.J. No. 2145, 2010 ONCJ 184, at para. 15; Carty-Pusey v. Pusey, 2015 ONCJ 382, at para. 58.
[24] Further, I am left very uncertain as to Mr. Fry’s current working hours and his work future.
Cash Income
[25] Ms. Fry states in her reply affidavit, at para. 7, that Mr. Fry works consistently, “driving truck for cash income.” However, this allegation was first stated in Ms. Fry’s reply affidavit, and no other details relating to this allegation are provided. In the circumstances, I will not give any weight to this evidence.
Expenses
[26] Mr. Fry says the deductions from revenue which give rise to his low net income are all appropriate for tax purposes, but he acknowledges that certain expenses claimed for tax purposes cannot be deducted for purposes of support calculations.
[27] At paragraph 10 of his affidavit, Mr. Fry lists his sources of income for the year 2019, including Old Age Security, CPP benefits, RRSP income, and taxable dividends. These add to $23,056.12. He then says, “Income from my trucking company for the 2019 year after expenses was $10,862.00.” It would be more accurate to state that this was his net business income for the fiscal year ended March 31, 2019. However, if we assume the net business income was the same for the calendar year, his total income for the calendar year would be $33,918.52.
[28] At paragraph 12 of his affidavit, Mr. Fry acknowledges that he has deducted $300 per month for his home office. His affidavit then inexplicably translates this to $3,000 per year, rather than $3,600 per year, saying “For the purposes of spousal support calculations, I have added the deduction for the home office in the amount of $3,000 back into my income as it is not a direct expense.”
[29] At paragraph 15 of his affidavit, Mr. Fry states,
I do not earn $100,000 per year. I have enclosed the receipts from my trucking company in order to substantiate my actual earnings of $33,058. It is my position that the only expense that might be considered to be added back into my income, would be the deduction of an office expense of having an office in my home at $300.00 per month or $3,000 annually. Therefore, when added back showing an income of $36,058.00, which includes the following: Old Age Security-$7,272.00, CPP-$6,036, Canadian dividends-$8,338, RRSP income-$1,299, Interest-$114.
[30] By “receipts” Mr. Fry does not mean documentation of income received, but rather he is referring to the receipts for claimed expenses, and what he means is that the expense receipts establish the claimed expenses to deduct from his revenue and thereby substantiate his net income from trucking.
[31] However, the calculation of $36,058.00 remains confusing because the math at paragraphs 10 and 12 of his affidavit would suggest total income of $36,918.52. Nowhere does the $36,058 number get explained. He may have been rounding the $10,862 figure for the business’s net income down to $10,000. If so, his net income is understated.
[32] Mr. Fry’s affidavit evidence sometimes cites very precise figures and sometimes cites rough figures. The $36,058.00 figure cited as his income represents false precision.
[33] In any event, his net income is understated.
Net Income and Dividends
[34] Mr. Fry’s financial statements and tax records indicate that his company’s net income was as follows for the fiscal years ending March 31: 2016, $32,874; 2017, $24,830; 2018, $19,757; 2019, $10,862. Dividends from the company were: 2016, $35,060; 2017, $28,600; 2018, $35,200; 2019, $14,500. The company’s total liability and shareholder’s equity remained fairly consistent throughout.
[35] The parties dispute whether a 2019 T5 in the amount of $8,398 issued by Bob Fry Trucking to Ms. Fry is properly attributable as income to her. Ms. Fry says she did not receive the money. Mr. Fry says it was for $14,000 in withdrawals from the business account that Ms. Fry made. Ms. Fry acknowledges that she withdrew these funds from the business but says she put them in joint account and the funds were used to pay joint bills.
[36] This is an example of the interdependent finances of the parties. What is clear is that the funds came from Mr. Fry’s business. For purposes of calculating spousal support, it is safe to assume Ms. Fry will not be receiving further dividends. For spousal support calculations, the income is attributable to Mr. Fry, not Ms. Fry.
[37] As indicated, neither party has engaged a forensic accountant at this stage to analyze the business income. Also, expansive disclosure occurred only recently. Thus, it is understandable that the parties cannot provide much analysis. However, it leaves me without much to go on in determining an appropriate level of income to attribute to Mr. Fry.
[38] To my eye as a complete lay person, the expenses described by Mr. Fry do appear largely appropriate. Undoubtedly, certain business expenses benefited the couple as a couple and there should be an adjustment to reflect this. The home office expense claim mentioned above is an example. As another example, it is apparent that the couple’s cell phone bills were paid by the company, which would benefit them both personally.
[39] Further, to the extent the lifestyle of the parties is described in their affidavits, it appears they lived a modest lifestyle. I cannot say that there is a discrepancy between the net income of the parties (when dividends and a modest adjustment for certain expenses is made) and the lifestyle they maintained.
[40] However, it is impossible to believe that Mr. Fry only nets $11,000 or even $36,000 from his $170,000 to $180,000 revenue. As already stated, the self-employed person has the obligation to prove their net income. Thousands of pages of receipts have been included in Mr. Fry’s affidavit, but no analysis.
[41] Mr. Fry’s updated financial statement suggests his total annual income from all sources is roughly $49,000.
[42] For purposes of the interim spousal support calculation, I conclude on an interim and approximate basis that I should attribute annual income to Mr. Fry as follows: $7,272 for Old Age Security pension; $6,035 for CPP Retirement benefit; dividends of $14,500; RRSP income of $1,300; interest income of $100; and self employment income of $50,000.
Ms. Fry’s Income
[43] Ms. Fry’s 2019 line 150 income is $43,463. As indicated, for purposes of the support calculation it is appropriate to subtract the $8,398 dividend income from this, as it derives from Bob Fry Trucking. This yields annual income of $35,065 for 2019, of which $5,015 was CPP Retirement Benefits.
[44] Ms. Fry provided current pay stubs and deposed that her current income is $2,287 per month plus a bonus of $167 per month. Annualizing this amount would give $29,448 in employment income and $5,016 in CPP Retirement Benefits income. I would use these figures for purposes of the interim spousal support calculation.
Household Expenses
[45] The parties have agreed to equal sharing of household expenses. Counsel agreed at the hearing of the motion that the parties should be able, between themselves, to determine and equally share household expenses going forward until the house is sold.
Support Payments to Date
[46] Ms. Fry deposes that Mr. Fry has not paid any support since the separation.
[47] Mr. Fry has been paying approximately $700 per month into the parties’ joint account. This account is used to pay household expenses, including utilities.
[48] Mr. Fry’s affidavit characterizes the $700 per month as support payments.
[49] There is a joint line of credit on the house with a current balance of $126,000. Mr. Fry says the carrying costs for this are approximately $500 per month and it does not come from the joint account. He pays this. He says that $50,000 from this was loaned to their son. I infer that the rest is used to support Mr. Fry’s trucking business. The son has only made a few payments towards his loan. I have no evidence on who the son pays when he does make payments. Carrying costs for the line of credit are legitimate business expenses, but Mr. Fry can’t claim that this $500 per month is somehow credit for support or consideration to Ms. Fry, and at the same time claim it as an expense to be deducted from his business income. At best he can claim the interest on the amount loaned to the son as a joint expense but the payments from the son would then be joint revenue.
[50] I am ordering interim support and will not be ordering retroactive support payments. The trial judge will be in a better position to fully assess the appropriate level of support and how to characterize the payments Mr. Fry has been making. Going forward he will be paying interim support and sharing the household expenses equally.
Interim Support Order
[51] In the circumstances of this case, I find on an interim basis that Ms. Fry is entitled to support towards the upper end of the range in the guidelines. I order Mr. Fry to pay support on an interim basis in the amount of $1,750 per month.
[52] Mr. Fry shall make payments of this amount monthly on the first of the month, effective January 1, 2021.
[53] As indicated, I will leave retroactive support to be determined by the trial judge.
[54] I would have benefited from a forensic accounting report assessing Mr. Fry’s net income. My order for support is subject to review if either party obtains an accounting report (or if they obtain a joint report).
Benefits and Life Insurance
[55] Ms. Fry also seeks orders that, so long as he is obligated to pay support, Mr. Fry maintain Ms. Fry on his health and dental benefits, and that he maintain her as irrevocable beneficiary of his life insurance policy. Mr. Fry had removed Ms. Fry from his benefits and life insurance without obtaining advice from counsel. At the motion hearing, counsel advised this is being reversed. Unopposed, Mr. Fry is ordered to maintain Ms. Fry on his health and dental benefits, and to maintain her as beneficiary of his life insurance policy, until trial or until the parties otherwise agree.
Costs
[56] Costs will be addressed with oral submissions in a 15-minute Zoom videoconference on January 28, 2020 at 9:15AM. If that date is not convenient to counsel, counsel should contact my judicial assistant with their joint availability for a 9:15AM conference over the next few weeks.
[57] Any offers to settle, costs outlines, or other supporting documentation on costs may be sent to me by email to my judicial assistant in advance of the hearing.
Signed: Justice R. Chown
Released: January 22, 2021
COURT FILE NO.: FS-20-97313
DATE: 20210122
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Fry
Applicant
- and -
Fry
Respondent
REASONS FOR JUDGMENT
Chown J.
Released: January 22, 2021